SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)*
(x) Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended September 30, 1995
or
( ) Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from to
COMMISSION FILE NUMBER 1-8973
KYSOR INDUSTRIAL CORPORATION
(exact name of registrant as specified in its charter)
Michigan (state or other jurisdiction of incorporation or organization)
38-1909000 (I.R.S. Employer Identification Number)
One Madison Avenue, Cadillac, Michigan 49601
(Address of principal executive offices) ( Zip Code)
(616) 779-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $1.00 par value, number of shares outstanding as of
October 11, 1995:
5,579,260
<TABLE>
KYSOR INDUSTRIAL CORPORATION
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
The interim financial data presented herein is unaudited but, in the opinion of the
management, reflects all adjustments (none of which was other than a normal recurring
adjustment) necessary for a fair presentation of such information. Results for interim
periods should not be considered indicative of results for a full year. There were no
undisclosed material unusual charges or credits to income during the quarter ended September
30, 1995 nor was there a change in independent accountants during the period.
Consolidated Statement of Income
(Unaudited, amounts in thousands except per share data)
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
___________ ___________ ____________ ____________
<S> <C> <C> <C> <C>
SALES AND REVENUES
Net sales $ 90,019 $ 83,993 $ 274,819 $ 230,106
Interest and other revenues 976 548 2,066 1,270
___________ ___________ ____________ ____________
TOTAL SALES AND REVENUES 90,995 84,541 276,885 231,376
___________ ___________ ____________ ____________
COSTS AND EXPENSES
Cost of sales 69,108 64,381 211,055 177,529
Selling and administrative expenses 13,553 11,908 41,751 35,351
Interest expense 398 459 1,320 1,499
Other expenses 307 230 898 836
___________ ___________ ____________ ____________
TOTAL COSTS AND EXPENSES 83,366 76,978 255,024 215,215
___________ ___________ ____________ ____________
INCOME BEFORE INCOME TAXES 7,629 7,563 21,861 16,161
INCOME TAXES 2,995 3,230 9,285 6,730
___________ ___________ ____________ ____________
NET INCOME 4,634 4,333 12,576 9,431
DIVIDENDS ON PREFERRED STOCK
(Net of income tax benefit) 243 244 730 734
___________ ___________ ____________ ____________
EARNINGS APPLICABLE TO COMMON STOCK $ 4,391 $ 4,089 $ 11,846 $ 8,697
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
PRIMARY EARNINGS PER COMMON SHARE $ 0.75 $ 0.70 $ 2.01 $ 1.51
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.66 $ 0.60 $ 1.76 $ 1.29
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Primary weighted average common
shares and equivalents 5,835 5,818 5,900 5,758
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Dividends declared per common share $ 0.15 $ 0.13 $ 0.45 $ 0.38
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited, dollars in thousands)
<CAPTION>
September 30, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $17,874 $15,850
Accounts receivable less $2,320 and
$2,027 allowance for doubtful accounts 56,976 46,437
Finished goods inventory 8,605 6,362
Work-in-process inventory 10,729 10,039
Raw Material Inventory 18,098 19,864
Prepaid expenses 2,783 2,067
Deferred income tax charges 7,054 7,202
____________ ____________
TOTAL CURRENT ASSETS 122,119 107,821
____________ ____________
PROPERTY, PLANT AND EQUIPMENT
Land 3,313 2,612
Buildings 33,892 31,103
Machinery and equipment 75,065 67,518
____________ ____________
112,270 101,233
Less accumulated depreciation 65,803 58,320
____________ ____________
TOTAL PROPERTY, PLANT AND EQUIPMENT 46,467 42,913
____________ ____________
OTHER ASSETS
Goodwill, patents and other intangibles (net of
amortization of $2,990 and $2,592) 4,218 4,616
Cash value of officers' life insurance 11,568 10,623
Deferred income tax charges 6,576 5,383
Miscellaneous receivables and other assets 5,633 6,155
____________ ____________
TOTAL OTHER ASSETS 27,995 26,777
____________ ____________
TOTAL ASSETS $196,581 $177,511
____________ ____________
____________ ____________
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(continued)
(Unaudited, dollars in thousands)
<CAPTION>
September 30, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $10,987 $6,597
Accounts payable 22,128 21,122
Accrued income taxes payable 5,867 1,095
Accrued expenses and contingent liabilities 30,474 27,831
____________ ____________
TOTAL CURRENT LIABILITIES 69,456 56,645
Long-term debt, less current maturities,
plus guarantee of ESOP indebtedness 26,538 30,394
Accumulated postretirement benefit obligation 13,531 13,037
Other long-term liabilities 10,661 9,517
____________ ____________
TOTAL LIABILITIES AND DEFERRED CREDITS 120,186 109,593
____________ ____________
PREFERRED SHAREHOLDERS' EQUITY
Employee Stock Ownership Plan Preferred Stock,
shares authorized 5,000,000; outstanding
798,778 and 803,553 stated value of $24.375 19,470 19,587
Unearned deferred compensation under
employee stock ownership plan (14,662) (15,311)
____________ ____________
TOTAL PREFERRED SHAREHOLDERS' EQUITY 4,808 4,276
____________ ____________
COMMON SHAREHOLDERS' EQUITY
Common stock, $1 par value, shares authorized
30,000,000, outstanding 5,570,038
and 5,640,881 5,570 5,641
Additional paid-in capital 3,067 5,386
Retained earnings 62,782 53,443
Translation adjustment 1,226 807
Notes receivable-common stock
78,122 and 96,705 shares (1,058) (1,286)
Unearned deferred compensation under
employee stock ownership plan - (349)
____________ ____________
TOTAL COMMON SHAREHOLDERS' EQUITY 71,587 63,642
____________ ____________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $196,581 $177,511
____________ ____________
____________ ____________
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, amounts in thousands)
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $12,576 $9,431
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 6,777 6,821
Provision for losses on accounts receivable 362 392
(Gain) Loss on sales of fixed assets (53) (132)
Deferred compensation (ESOP) 998 997
Deferred income taxes (1,045) (1,963)
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable (10,901) (16,425)
Inventories (1,167) (6,998)
Prepaid expenses (716) (392)
Accounts payable 1,298 7,176
Accrued expenses and contingent liabilities 2,642 4,355
Accrued income taxes payable 6,097 1,692
Other long-term liabilities 1,638 676
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,506 5,630
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to property, plant and equipment (9,412) (5,524)
Proceeds from sales of property, plant and equipment 72 185
Acquisitions, net of cash acquired - (4,128)
Decrease (Increase) in other long-term assets (424) (1,035)
Unrealized translation gain (loss) (120) 536
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (9,884) (9,966)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Current borrowings 3,200 1,268
Principal payments against long-term debt (2,666) (2,521)
Proceeds from issuance of common stock 2,620 1,399
Purchase of Common Stock (5,777) (234)
Common stock and preferred stock dividends paid (3,975) (3,622)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (6,598) (3,710)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 2,024 (8,046)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 15,850 21,339
CASH AND EQUIVALENTS AT END OF PERIOD $17,874 $13,293
The accompanying notes are an integral part of the financial statements.
</TABLE>
<F1>
Notes to the financial statements
Note A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting solely of normal recurring accruals) considered
necessary for fair presentation have been included. For further information,
refer to the consolidated financial statements and footnotes included in the
Company's annual report on Form 10-K for the fiscal year ended
December 31, 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Kysor Industrial Corporation:
We have reviewed the accompanying consolidated balance sheet of
Kysor Industrial Corporation and Subsidiaries as of September
30, 1995, and the related consolidated statement of income for
the three-month and nine-month periods ended September 30, 1995
and 1994 and the consolidated statement of cash flows for the
nine-month periods ended September 30, 1995 and 1994. These
financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Kysor Industrial Corporation and Subsidiaries as of December 31,
1994 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended
(none of which are presented herein); and in our report dated
February 13, 1995 we expressed an unqualified opinion on those
consolidated financial statements.
By s/COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
October 18, 1995
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Kysor Industrial Corporation's sales and revenues for the
third quarter 1995 increased to $91.0 million, from the $84.5 million
reported for the same period in 1994. Net income for the third quarter
of 1995 rose 7% to $4.6 million from $4.3 million reported for the same
period last year. This equates to primary earnings per share of $.75
for the quarter ended September 30, 1995 compared to $.70 for the
same period in 1994.
The Transportation Products Group net sales were down
5% to $37.0 million for the third quarter of 1995 compared to the $39.0
million reported in the same period a year ago. Operating profit for the
Transportation Products Group for the third quarter 1995 decreased
16% to $4.6 million from the $5.5 million reported for the same period
in 1994. The Transportation Products Group backlog is beginning to
reflect a downturn in incoming orders in the heavy-duty truck market,
although truck manufacturers' current backlogs should be sufficient to
provide increased overall production levels in 1995.
The Commercial Products Group net sales increased
18% to $53.0 million for the third quarter of 1995 compared to $44.9
million reported for the same period a year ago. Operating profit for
the Commercial Products Group for the third quarter of 1995 increased
24% to $6.3 million from the $5.0 million reported for the same period
in 1994. In October 1995, the Company announced its decision to exit the
commercial refrigeration operations located in Limburg, Germany by year end.
It is anticipated that although costs to exit the German operations will be
significant, the Company will obtain a U.S. tax benefit offsetting all of the
anticipated exit costs.
The Company is presently involved in certain
environmental proceedings with respect to soil and groundwater
contamination in Cadillac, Michigan, as described in Note 10,
Contingent Liabilities, to the Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994 ("the Form 10-K"). In addition, as disclosed in Note 10 and
under the heading "Legal Proceedings" in the Form 10-K and below,
the Company is also involved in various other legal proceedings
including certain proceedings involving allegedly contaminated sites to
which the Company has been named a potentially responsible party
("PRP") under the Federal Superfund law or comparable state laws.
Although discovery in certain of these proceedings has not been
completed, subject to the contingencies discussed in Note 10,
management does not believe, based on information presently
available to it, that the ultimate aggregate cost to the Company of such
proceedings would have a material adverse effect on its financial
condition, results of operations, or liquidity.
<PAGE>
Liquidity and Capital Resources
At September 30, 1995, the Company had cash and
equivalents of $17.9 million compared to $15.9 million at December
31, 1994. Additions to property, plant and equipment for the
nine-month period ended September 30, 1995, totaled $9.4 million
compared to $5.5 million during the same period in 1994. Management
believes working capital is sufficient for current requirements.
At September 30, 1995, the Company had no
outstanding borrowings on its $20.0 million revolving line of credit.
<TABLE>
KYSOR INDUSTRIAL CORPORATION
FINANCIAL INFORMATION BY SEGMENT
(Unaudited, amounts in thousands)
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
_____________________ _____________________
1995 1994 1995 1994
________ ________ ________ ________
<S> <C> <C> <C> <C>
NET SALES
Commercial Products
United States $49,626 $40,844 $137,890 $106,990
Europe 3,368 4,104 13,082 11,288
________ ________ ________ ________
Total Commercial Products 52,994 44,948 150,972 118,278
Transportation Products
United States 33,725 36,677 113,496 105,487
Europe 3,300 2,368 10,351 6,341
________ ________ ________ ________
Total Transportation Products 37,025 39,045 123,847 111,828
________ ________ ________ ________
NET SALES $90,019 $83,993 $274,819 $230,106
________ ________ ________ ________
________ ________ ________ ________
OPERATING PROFIT
Commercial Products
United States $6,961 $5,001 $17,846 $10,653
Europe (700) 32 (2,745) (941)
________ ________ ________ ________
Total Commercial Products 6,261 5,033 15,101 9,712
Transportation Products
United States 4,281 5,405 16,023 15,174
Europe 276 45 680 14
________ ________ ________ ________
Total Transportation Products 4,557 5,450 16,703 15,188
________ ________ ________ ________
TOTAL OPERATING PROFIT 10,818 10,483 31,804 24,900
Corporate Administrative Expense (Net) (2,791) (2,461) (8,623) (7,240)
Interest Expense (398) (459) (1,320) (1,499)
________ ________ ________ ________
INCOME BEFORE INCOME TAXES $7,629 $7,563 $21,861 $16,161
________ ________ ________ ________
________ ________ ________ ________
</TABLE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is presently involved in various legal
proceedings, including certain environmental proceedings, as
described in Note 10, Contingent Liabilities, to the Financial
Statements included in the Form 10-K and under the heading "Legal
Proceedings" in the Form 10-K. Except as described in the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1995, there have been no material changes in the legal
proceedings described in the Form 10-K.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
11 Statement Regarding Computation of Earnings
Per Share
15 Letter from Coopers & Lybrand regarding
unaudited Financial Statements
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed by the registrant
during the quarter ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
KYSOR INDUSTRIAL CORPORATION
Date: November 3, 1995 By s\Terry M. Murphy
Terry M. Murphy
Vice President,
Chief Financial Officer
(principal financial officer and duly
authorized signatory for registrant)
Date: November 3, 1995 By s\Robert L. Joseph
Robert L. Joseph
Comptroller
(Chief Accounting Officer)
EXHIBIT INDEX
DESCRIPTION EXHIBIT NO.
Statement Regarding Computation of Earnings Per Share 11
Letter from Coopers & Lybrand Regarding Unaudited Financial
Statements 15
Financial Data Schedule 27
<TABLE>
EXHIBIT 11 - S-K Item 601 (b) (11)
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
<CAPTION>
Nine Months
Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION
Net Income $12,575,876 $9,430,612
Less dividends on preferred stock 1,175,471 1,181,143
Plus tax benefit from preferred dividends 446,000 448,000
---------- ----------
Earnings (Loss) applicable to common stock 11,846,405 8,697,469
========== ==========
Weighted average common shares outstanding 5,521,999 5,440,592
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based
on year to date average price 377,597 317,737
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,899,596 5,758,329
========= =========
Primary earnings per share $2.01 $1.51
======== ========
FULLY DILUTED EARNINGS PER SHARE CALCULATION
A.
Weighted average common shares outstanding 5,521,999 5,440,592
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based on
the greater of year to date average or end of period price 383,199 406,129
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,905,198 5,846,721
======== ========
Fully diluted earnings per share (A) $2.01 $1.49
======== ========
B.
Assuming preferred stock converted to common
Vested Preferred shares issued 199,344 168,388
Non-vested Preferred shares issued 599,434 636,990
---------- ----------
Total Preferred shares issued 798,778 805,378
Vested Preferred shares issued 199,344 168,388
Guaranteed floor price for involuntary conversions $24.375 $24.375
---------- ----------
Subtotal $4,859,003 $4,104,465
The lower of year to date average or end of period common
stock price $21.5645 $17.5510
-------- --------
Required common shares to be issued assuming involuntary
conversion of vested shares at guaranteed floor price 225,324 233,859
Required common shares to be issued assuming voluntary
conversion of non-vested shares on one-for-one basis 599,434 636,990
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part A. 5,905,198 5,846,721
---------- ----------
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part B. 6,729,956 6,717,570
========== ==========
Net Income $12,575,876 $9,430,612
Additional ESOP expense presently funded by preferred dividend (1,175,471) (1,181,143)
Plus tax benefit on additional ESOP expense 70,376 60,424
Common stock dividends to reduce ESOP expense 371,000 331,000
-------- --------
Adjusted Net Income $11,841,781 $8,640,893
========= =========
Fully diluted earnings per share (B) $1.76 $1.29
======== ========
Fully diluted earnings (loss) per share (Lower of (A) or (B)) $1.76 $1.29
======== ========
</TABLE>
To the Board of Directors and Shareholders
Kysor Industrial Corporation
Re: Kysor Industrial Corporation Registration Statement Nos.
2-67607, 2-86346, 2-99855, 33-18438, 33-30463,
33-27360, 33-59412 and 33-71758 on Form S-8
We are aware that our report dated October 18, 1995 on our
review of interim financial information of Kysor Industrial
Corporation and Subsidiaries for the periods ended September 30,
1995 and 1994 and included in the Company's quarterly report on
Form 10-Q for the quarters then ended are incorporated by
reference in these registration statements. Pursuant to Rule
436(c) under the Securities Act of 1933, this report should not
be considered a part of the registration statements prepared or
certified by us within the meaning of Sections 7 and 11 of that
Act.
By s/COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
October 18, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
unaudited consolidated condensed financial statements of Kysor Industrial
Corporation and Subsidiaries for the quarter and nine months ended
September 30, 1995 and is qualified in its entirety by reference to such
financial statements.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 17,874
<SECURITIES> 0
<RECEIVABLES> 59,296
<ALLOWANCES> 2,320
<INVENTORY> 37,432
<CURRENT-ASSETS> 122,119
<PP&E> 112,270
<DEPRECIATION> 65,803
<TOTAL-ASSETS> 196,581
<CURRENT-LIABILITIES> 69,456
<BONDS> 26,538
<COMMON> 5,570
0
19,470
<OTHER-SE> 51,355
<TOTAL-LIABILITY-AND-EQUITY> 196,581
<SALES> 274,819
<TOTAL-REVENUES> 276,885
<CGS> 211,055
<TOTAL-COSTS> 252,806
<OTHER-EXPENSES> 898
<LOSS-PROVISION> 362
<INTEREST-EXPENSE> 1,320
<INCOME-PRETAX> 21,861
<INCOME-TAX> 9,285
<INCOME-CONTINUING> 12,576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,576
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 1.76
</TABLE>
